RE: LeoFinance - Anchor Protocol Where is 20% APR Coming From?

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I'll be the first to admit I'm newish to the crypto game, but I've bee in the finance game awhile. While it's relatively complex I personally don't see how it's a sustainable practice. Maybe it's just me but somehow everyone earning money at the same time seems (borrowers and lenders) seems a little off. I would potentially have to look at the anchor token white paper if I wanted to deep dive it but if that is what they are using to pay their borrowers to incentivize borrowing to also make a profit, how are they going to keep their token from inflating itself to be worthless? Maybe I'm not understanding something?



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You have it right. The reason why both borrowers and lenders are earning is because the protocol is dipping into its savings, aka yield reserve, for payouts. The borrower interest earn has been fluctuating a lot due in part the collateral bLuna is dropping in value. Just three days ago borrower’s rates were negative but Luna was over $90.

The thing to watch is how this protocol operates when it’s reserve yield is down to zero. It was suppose to last them for 1.5 years but at current interest payouts the time table have shifted. This Decentralized lending platform still works the same as a normal lending and borrowing except it allows people who have the most at stake to choose how the platform operates. Currently no action is being polled so I would assume status quo remains until bad things happen down the road. At least this is all transparent compare to shady finance in the commercial banks we have been use to.

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That's true and that is nice that i's so transparent, however for me if you can see the bad thing coming you should take preemptive action. That they're not is worrisome for me and would keep me from investing. !PIZZA and thanks for the explanation!

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